Understanding Tax and Super
Learn why we pay tax, how income tax and GST work, what superannuation is, and how to read a payslip.
Why Do We Pay Tax?
Tax is money that people and businesses pay to the government. The government uses tax money to pay for things that benefit everyone.
Schools
Hospitals
Roads
Defence
Income Tax
Income tax is paid on money you earn from working. Australia uses a progressive tax system — the more you earn, the higher percentage you pay on the extra amount.
Simplified Tax Brackets (Example)
| Income Range | Tax Rate |
|---|---|
| $0 - $18,200 | 0% (Tax-free!) |
| $18,201 - $45,000 | 16% |
| $45,001 - $135,000 | 30% |
| $135,001+ | 37% |
Note: These are simplified for learning. Actual rates change — check the ATO website for current rates.
Key point: The first $18,200 you earn is tax-free. You only pay tax on income above that amount. This is called the tax-free threshold.
GST: Goods and Services Tax
GST is a 10% tax added to most things you buy in Australia. When you buy a $10 item, $1 of that is GST that goes to the government.
How GST is Calculated
Price before GST: $50.00
GST (10%): $50.00 x 0.10 = $5.00
Total price (inc. GST): $50.00 + $5.00 = $55.00
GST-free items: Some things don't have GST, including fresh food (fruit, vegetables, bread, milk), education, and health services.
Superannuation (Super)
Superannuation is money saved for your retirement. In Australia, your employer must put extra money (currently 11.5%) into a special super account for you. You can't access it until you retire (usually around age 60).
How Super Works
You earn $1,000
Your salary
+ $115 to super
Employer pays 11.5%
Grows over decades
For retirement
Reading a Payslip
A payslip shows how your pay is calculated. Here are the key parts:
Sample Payslip
Bright Cafe Pty Ltd
Gross Pay
Total before deductions
$1,000.00
Income Tax
Taken out by ATO
- $150.00
Net Pay (Take-Home)
What lands in your bank
$850.00
Superannuation
Paid by employer (on top)
+ $115.00
Key Vocabulary
Gross Pay
Your total pay before tax is taken out.
Net Pay
Your take-home pay after tax is deducted. The money you actually receive.
GST
A 10% tax on most goods and services in Australia.
Superannuation
Compulsory retirement savings. Your employer pays it on top of your salary.
Worked Examples
A laptop costs $900 before GST. What is the price including GST?
Step 1: GST = $900 x 0.10 = $90
Step 2: Total = $900 + $90 = $990
Sam's gross pay is $800. Tax taken is $120. What is his net pay?
Net pay: Gross pay - Tax
Answer: $800 - $120 = $680 net pay
Emma earns $2,000 per month. Her employer pays 11.5% super. How much super per month?
Super: $2,000 x 0.115 = $230
Answer: $230 per month goes into her super account.
Knowledge Check
Select the correct answer for each question. Click "Check Answer" to see if you are right.
Question 1
A pair of shoes costs $120 before GST. How much is the GST (10%)?
Question 2
On a payslip, what is the difference between gross pay and net pay?
Question 3
Why is Australia's income tax system called "progressive"?
Question 4
Gross pay is $1,200 and tax is $180. What is the net pay?
Question 5
An employee earns $4,000/month. Their employer pays 11.5% super. How much super per month?
Key Concepts Summary
- ●Tax pays for public services: schools, hospitals, roads, defence.
- ●Australia has progressive income tax — higher earners pay more on their extra income.
- ●GST is 10% on most goods and services (but not fresh food or health).
- ●Superannuation is compulsory retirement savings paid by your employer.
- ●Gross pay - Tax = Net pay (your take-home amount).